DEVELOPMENT AND CLIMATE CHANGE

EPRI Global Climate Change Research Seminar:Issues in Climate PolicyIssues in Climate Policy

Rosina Bierbaum

Co‐director, WDR 2010 Dean, School of Natural Resources and   

New finance new instruments and new

, fEnvironment, University of Michigan 

May 18, 2010New finance, new instruments and new pressures are helping build momentum

CLIMATE CHANGE IS A THREAT TO DEVELOPMENT

BUT A CLIMATE‐SMART WORLD IS POSSIBLE IF WEBUT A CLIMATE SMART WORLD IS POSSIBLE IF WE…

Act now Act together

Act differently

New finance new instruments and new

together differently

New finance, instruments and New finance, new instruments and new pressures are helping build momentum

pressures are helping build momentum

SCIENTIFIC CONSENSUS: SERIOUS AND IMMEDIATE

2007 assessment2007 assessment

5

4

perature 

 (°C)

2

3

glob

al te

mdu

strial era

2°C over2

1ncrease in g

ince preind 2 C over 

preindustrial

T d 0 8°C

Risks to  Risk of  Distribution  Aggregate  Risks of0

1In s Today = + 0.8°C

Source: Smith and others, 2009

unique and threatened systems

extreme weather events

of impactsgg gimpacts large scale 

discontinuities

DEVELOPMENT CONSENSUS: THE POOR WILL SUFFER MOST

Historical cumulative emissions Impact damage costs

20

368064 80

High‐income  Developing countries countries

5.6 billion people1.1 billion people

A CLIMATE‐SMART WORLD IS POSSIBLE…

Annual public subsidies

Private funding for energy R&D

BUT TO MEET THE CHALLENGE, WE MUST

• ACT NOWACT NOW

• ACT TOGETHER

• ACT DIFFERENTLY

ACT NOW:

TODAY’S ACTIONS DETERMINE TOMORROW’S OPTIONSTODAY S ACTIONS DETERMINE TOMORROW S OPTIONS

Inertia in the climate systemsystem

Inertia in thebuilt environment

feasibility

built environment costs

Inertia in institutions andi di id l ’ b h iindividuals’ behaviorpolitical momentum

ACT NOW:

OR WE ARE HEADED TO MUCH MORE THAN 2˚C  

Projected annual total global emissions (billion tons of CO2 equivalent)

ACT TOGETHER: 

HIGH‐INCOME COUNTRIES NEED TO TAKE THE LEAD

ACT TOGETHER:

BUT ALL HAVE A ROLE TO PLAY TO MANAGE COSTS

Marginal mitigation cost ($/tCO2e) Advanced technologies:

carbon capture and storageGt of foregone mitigation

60

80

100

120carbon capture and storage

Efficiency in buildings

Land‐use and land‐use change, mostly in developing countries

Gt of foregone mitigation

Additi l t f

‐20

0

20

40

0 10 20 30 40

Mitigation

Additional cost of achieving 10 Gt of mitigation

‐100

‐80

‐60

‐40Mitigation potential 

(GtCO2e/year)

Efficiency in motors, cars, and electricity co‐

Small hydro and nuclear in developing countries Renewable energy:

Wind and solar

‐160

‐140

‐120

100

Marginal cost, all countries

Mitigation measure in a developing country 

Negative costs:Long‐term savings 

t i h i iti l

, yeneration

Marginal cost, all countries

Marginal cost, only high‐income countries

Mitigation measure in a high‐income country

outweigh initial costs

ACT TOGETHER:

AND COOPERATION HELPS BUFFER SHOCKS

Global food trade depends on very few countries

ACT DIFFERENTLY:

RAPID INNOVATION IN MITIGATION AND ADAPTATIONSector Mitigation Adaptation Examples

Transport √ Electric vehicles

Industry √ Energy efficiencyIndustry √ Energy efficiency

Energy supply √ Renewable energy

Waste management

√ Recovering/reducing methane from wastemanagement

Building √ √ Storm‐resistant buildings, energy efficiency

Agriculture √ √ Drought resistant crops

F t √ √ P i d f f t d tForestry √ √ Processing and use of forest products

Human health √ Health monitoring and surveillance systems

Coastal  √ Geographical planning systems for coastal zonesadaptation

Water √ Non‐water based sanitation

12

ACT DIFFERENTLY:

RADICALLY TRANSFORM ENERGY SYSTEMS

1,400

Global primary energy mix (exajoules)

1,000

1,200

600

800

00

0

200

400

Energy efficiency

02000 2020 2040 2060 2080 2100

Year

ACT DIFFERENTLY:

RADICALLY TRANSFORM ENERGY SYSTEMSRADICALLY TRANSFORM ENERGY SYSTEMS

REMIND IMAGE MESSAGEMini-CAM

line

base

eq

Renewable Energy efficiency CCS Nuclear

50 p

pm-e

4

ACT DIFFERENTLY:

MASSIVELY SCALE UP CCS A TECHNOLOGICAL CHALLENGEMASSIVELY SCALE UP CCS—A TECHNOLOGICAL CHALLENGE

box figure 7.5Edmonds, 2009

ACT DIFFERENTLY:

RADICALLY TRANSFORM ENERGY SYSTEMS

ACT DIFFERENTLY:

MAKE ROBUST RATHER THAN OPTIMAL DECISIONS

ACT DIFFERENTLY:

MANAGE CONTINGENCIES BETTER

ACT DIFFERENTLY:

MANAGE FOR MULTIPLE STRESSES

map FB.1

ACT DIFFERENTLY:

MAKE ROBUST RATHER THAN OPTIMAL DECISIONS

Infrastructure to withstand new “extremes”Infrastructure to withstand new  extremes

Seed varieties that perform well in droughts/floods/heat

P i i i l d d l i l hPrioritize lands to preserve and manage multiple threats

Increased need for  social safety nets / insurance

Emergency response plans, early‐warning alert systems 

Information systems / best practicesy / p

Weather and climate monitoring / regional assessments

MAKING IT HAPPENMAKING IT HAPPEN

Act now Act together

Act differently

New finance new instruments and new

together differently

New finance, instruments and New finance, new instruments and new pressures are helping build momentum

pressures are helping build momentum

MAKING IT HAPPEN:

NEW RESOURCES

MAKING IT HAPPEN:

THE FINANCING CHALLENGETHE FINANCING CHALLENGE

Critical to reconcile equity and efficiency

Requires massive scaling up:Costs: some $200‐275 Bn in 2030Costs: some $200 275 Bn in 2030 

Financing: up to $550 bn in associated mitigation finance 

Can be done:Can be done:Costs = 0.4% of high‐income country GDP to 2100

Financing = 3% of current global investments

But requires all options availableBut requires all options available

MAKING IT HAPPEN:

THE FINANCING CHALLENGE: IMMEDIATE NEEDS

Reform carbon markets:Reform carbon markets: Reform project‐based CDMREDD Land emissions and soil carbon? Black Carbon?Land emissions and soil carbon?  Black Carbon?

Leverage private finance: Better information on climate trends and risksInvestment climate conducive to low carbon investmentsLimited potential for public–private partnerships?  Risk finance (e.g., cat bonds, insurance)g

Allocation mechanism for adaptation finance

MAKING IT HAPPEN:

NEW INSTRUMENTS

To support communities and decisionmakersLow‐tech and high‐tech

MAKING IT HAPPEN:

INCREASE THE PACE OF INVENTION

figure 7.4

MAKING IT HAPPEN:

INCREASE THE PACE OF INNOVATION / PENETRATIONINCREASE THE PACE OF INNOVATION / PENETRATION

Many climate change technologies are already financial viable

27

Source: World Bank (2009) World Development Report 2010

MAKING IT HAPPEN:

S O G O C SSUPPORTING POLICIES

Abatement cost New Technologies

E Effi iRenewable Energy

Abatement potential

Energy Efficiency0

Energy pricing reformsEnergy pricing reforms

Policyl

•Regulations and financial incentives•Financing mechanisms•Institutional reform

•Feed‐in Tariff or Renewable Portfolio Standard•Tax on fossil fuel

•Support for R&D•Financing    incremental cost •TransferTools Institutional reform Tax on fossil fuel Transfer technologies

MAKING IT HAPPEN:

NEW PRESSURES

We’ve come a long wayDrumbeat of science

NEW PRESSURES

Drumbeat of sciencePolitics are changing Cities, states and countries are taking actionIndividuals, business and organizations are responding 

M i d d t t i tMore is needed to turn awareness into the needed actions

“ Soft”  policy tools – communication and education;  social norms

25% reduction$100 million saved 69% reduction

65% reduction$791 million saved

17% reduction $100 million saved 69% reduction$2 billion saved

WDR 2010 SUGGESTS THAT A CLIMATE‐SMART WORLD IS

POSSIBLE, IF WE…

Act now Act together

Act differently

New finance, new instruments and new New finance, instruments and h l i b ild tpressures are helping build momentumpressures are helping build momentum

WDR 2010 SUGGESTS THAT A CLIMATE‐SMART WORLD IS

POSSIBLE, IF WE…

Break high carbon habit

Act now Act together

Act differently

Manage scarce resources

Reduce vulnerability

New finance, new instruments and new New finance, instruments and h l i b ild tpressures are helping build momentumpressures are helping build momentum

WDR 2010 SUGGESTS THAT A CLIMATE‐SMART WORLD IS

POSSIBLE, IF WE…

New technologies

Act now Act together

Act differently

Anticipatory adaptation

Manage costs & buffer shocks

New finance, new instruments and new New finance, instruments and h l i b ild t

shocks

pressures are helping build momentumpressures are helping build momentum

WDR 2010 SUGGESTS THAT A CLIMATE‐SMART WORLD IS

POSSIBLE, IF WE…

Climate-smart policies

Act now Act together

Act differently

Robust decision-making

Plan, prepare, protect

New finance, new instruments and new New finance, instruments and h l i b ild tpressures are helping build momentumpressures are helping build momentum

WDR 2010 SUGGESTS THAT A CLIMATE‐SMART WORLD IS

POSSIBLE, IF WE…

Act now Act together

Act differently

New finance, new instruments and new New finance, instruments and 

pressures are helping build momentumpressures are helping build momentum

pressures are helping build momentum

“It is our collective responsibility p yto find ‘unselfish’ solutions and fast before it’s too late to reverse the damage caused every day.”g y y

Maria Kassabian, age 10, Nigeria

http://blogs.worldbank.org/ climatechange/

http://worldbank.org/WDR2010

High‐income countries need to significantly reduce emissions…

Making it happen:

The Technology challengeThe Technology challenge